Net Interest Margin Expands by 28 Basis Points
71% Increase in Loans Originated For Sale
Capital Ratios Improve and Remain Significantly Above
'Well-Capitalized' Regulatory Thresholds
RIVERSIDE, Calif., Jan. 29, 2009 (GLOBE NEWSWIRE) -- Provident Financial Holdings, Inc. ("Company"), (Nasdaq:PROV), the holding company for Provident Savings Bank, F.S.B. ("Bank"), today announced second quarter results for the fiscal year ending June 30, 2009.
For the quarter ended December 31, 2008, the Company reported a net loss of $(6.51) million, or $(1.05) per diluted share (on 6.20 million weighted-average shares outstanding), compared to net income of $1.04 million, or $0.17 per diluted share (on 6.20 million weighted-average shares outstanding), in the comparable period a year ago. The decrease in the second quarter results was primarily attributable to an increase in the provision for loan losses, partly offset by an increase in non-interest income, an increase in net interest income (before the provision for loan losses) and a decrease in operating expenses.
"Deterioration in general economic conditions resulted in a $16.5 million provision for loan losses during the quarter ended December 31, 2008, which is prudent and necessary for the long-term financial strength of the Company," said Craig G. Blunden, Chairman, President and Chief Executive Officer of the Company. "Our capital position and allowance for loan losses will help us withstand the uncertain recessionary environment and we are pleased that were are in a position that allows us to take the forceful steps necessary under the circumstances."
As of December 31, 2008 the Bank exceeded all regulatory capital requirements and is deemed "well-capitalized" with Tangible Capital, Core Capital, Total Risk-Based Capital and Tier 1 Risk-Based Capital ratios of 7.25 percent, 7.25 percent, 12.88 percent and 11.63 percent, respectively. These ratios have improved from 7.19 percent, 7.19 percent, 12.25 percent and 10.99 percent, respectively, at June 30, 2008 and are well above the minimum required ratios to be deemed "well-capitalized" (5.00 percent for Core Capital, 10.00 percent for Total Risk-Based Capital and 6.00 percent for Tier 1 Risk-Based Capital). The Company did not repurchase any of its common stock during the quarter ended December 31, 2008.
Return (loss) on average assets for the second quarter of fiscal 2009 was negative (1.67) percent, compared to 0.26 percent for the same period of fiscal 2008. Return (loss) on average stockholders' equity for the second quarter of fiscal 2009 was negative (21.44) percent, compared to 3.30 percent for the comparable period of fiscal 2008.
On a sequential quarter basis, the second quarter results decreased to a net loss of $(6.51) million from net income of $329,000 in the first quarter of fiscal 2009. The decrease was primarily attributable to an increase in the provision for loan losses, a decrease in net interest income and a decrease in non-interest income, partly offset by a decrease in operating expenses. Diluted earnings (loss) per share decreased $1.10, to a loss of $(1.05) from $0.05 per share in the first quarter of fiscal 2009. Return (loss) on average assets decreased 175 basis points to negative (1.67) percent for the second quarter of fiscal 2009 from 0.08 percent in the first quarter of fiscal 2009 and return (loss) on average equity for the second quarter of fiscal 2009 was negative (21.44) percent, compared to 1.06 percent for the first quarter of fiscal 2009.
For the six months ended December 31, 2008, the net loss was $(6.18) million, compared to net income of $1.66 million in the comparable period ended December 31, 2007; and diluted earnings (loss) per share for the six months ended December 31, 2008 decreased to a loss of $(1.00) from earnings of $0.27 for the comparable period last year. Return (loss) on average assets for the six months ended December 31, 2008 decreased to negative (0.78) percent from 0.21 percent for the six-month period a year earlier. Return (loss) on average stockholders' equity for the six months ended December 31, 2008 was negative (10.07) percent, compared to 2.60 percent for the six-month period a year earlier.
Net interest income before provision for loan losses increased by $673,000, or seven percent, to $10.24 million in the second quarter of fiscal 2009 from $9.57 million for the same period in fiscal 2008. Non-interest income increased $377,000, or 19 percent, to $2.32 million in the second quarter of fiscal 2009 from $1.95 million in the comparable period of fiscal 2008. Non-interest expense decreased $81,000, or one percent, to $7.24 million in the second quarter of fiscal 2009 from $7.32 million in the comparable period in fiscal 2008.
The average balance of loans outstanding decreased by $72.6 million, or five percent, to $1.33 billion in the second quarter of fiscal 2009 from $1.40 billion in the same quarter of fiscal 2008, and the average yield decreased by 28 basis points to 5.93 percent in the second quarter of fiscal 2009 from an average yield of 6.21 percent in the same quarter of fiscal 2008. The decrease in the average loan yield was primarily attributable to accrued interest income reversals on non-accrual loans and loan payoffs which had a higher average yield than the average yield of loans held for investment. Total loans originated for investment in the second quarter of fiscal 2009 were $3.8 million, which consisted primarily of multi-family loans. This compares to total loans originated for investment of $94.3 million (including $29.3 million of loans purchased for investment) in the second quarter of fiscal 2008. The outstanding balance of "preferred loans" (multi-family, commercial real estate, construction and commercial business loans) decreased by $48.3 million, or eight percent, to $528.5 million at December 31, 2008 from $576.8 million at December 31, 2007. Outstanding construction loans declined $20.9 million, or 66 percent, to $11.0 million at December 31, 2008 from $31.9 million at December 31, 2007. The percentage of preferred loans to total loans held for investment at December 31, 2008 remained unchanged at 41 percent from December 31, 2007. Loan principal payments received in the second quarter of fiscal 2009 were $38.9 million, compared to $62.3 million in the same quarter of fiscal 2008.
The Federal Home Loan Bank ("FHLB") - San Francisco stock dividend (included in interest income) was negative $(125,000) in the second quarter of fiscal 2009 as compared to $432,000 in the same quarter last year. The decline was primarily attributable to the FHLB - San Francisco announcement that they will not pay a dividend for the quarter ended December 31, 2008 and an accrual adjustment resulting from a lower actual dividend received in November 2008 than accrued for the relevant period.
Average deposits decreased by $70.8 million, or seven percent, to $937.5 million and the average cost of deposits decreased by 96 basis points to 2.66 percent in the second quarter of fiscal 2009, compared to an average balance of $1.01 billion and an average cost of 3.62 percent in the same quarter last year. Transaction account balances (core deposits) decreased by $23.1 million, or seven percent, to $316.9 million at December 31, 2008 from $340.0 million at December 31, 2007. The decrease is primarily attributable to a decrease in savings, money market and checking account balances. Time deposits decreased by $47.8 million, or seven percent, to $617.9 million at December 31, 2008 compared to $665.7 million at December 31, 2007. The decrease in time deposits is primarily attributable to the strategic decision to temper the interest rates the Bank pays on time deposits and compete less aggressively with those competitors paying above market rates. Also, it should be noted, that the Company does not have any brokered deposits.
The average balance of borrowings, which primarily consists of FHLB - San Francisco advances, increased $10.9 million to $476.4 million in the second quarter of fiscal 2009 while the average cost of advances decreased 48 basis points to 4.02 percent in the second quarter of fiscal 2009, compared to an average balance of $465.5 million and an average cost of 4.50 percent in the same quarter of fiscal 2008. The decrease in the average cost of borrowings was primarily the result of maturing long-term advances which had a higher average cost than the average cost of new advances. Additionally, interest rates on FHLB - San Francisco advances have fallen as a result of the unprecedented actions by the U.S. Treasury Department and Federal Reserve in response to the global credit crises.
The net interest margin during the second quarter of fiscal 2009 increased 28 basis points to 2.70 percent from 2.42 percent during the same quarter last year. On a sequential quarter basis, the net interest margin in the second quarter of fiscal 2009 decreased 19 basis points from 2.89 percent in the first quarter of fiscal 2009.
During the second quarter of fiscal 2009, the Company recorded a loan loss provision of $16.54 million, compared to a loan loss provision of $2.14 million during the same period of fiscal 2008. The loan loss provision in the second quarter of fiscal 2009 was primarily attributable to loan classification downgrades ($11.40 million) and an increase in the general loan loss allowance for loans held for investment ($5.94 million), partly offset by a decline in loans held for investment ($805,000). The general loan loss allowance was augmented to reflect the impact on loans held for investment resulting from the deteriorating general economic conditions of the U.S. economy such as higher unemployment rates, negative gross domestic product indicators and lower retail sales.
Non-performing assets increased to $57.0 million, or 3.67 percent of total assets, at December 31, 2008, compared to $32.5 million, or 1.99 percent of total assets at June 30, 2008 and $24.4 million, or 1.49 percent of total assets, at December 31, 2007. The non-performing assets at December 31, 2008 were primarily comprised of 136 single-family loans ($38.9 million), 10 construction loans ($2.3 million, of which, nine are associated with the Coachella, California construction loan fraud), two commercial real estate loans ($1.5 million), three multi-family loans ($1.1 million), two lot loans ($1.0 million), six commercial business loans ($115,000), eight single-family loans repurchased from, or unable to sell to investors ($901,000) and real estate owned comprised of 46 single-family properties ($10.7 million) and 15 undeveloped lots acquired in the settlement of loans ($419,000, of which, 14 are associated with the Coachella, California construction loan fraud). Net charge-offs for the quarter ended December 31, 2008 were $4.10 million or 1.24 percent of average loans receivable, compared to $3.14 million or 0.89 percent of average loans receivable for the quarter ended June 30, 2008 and to $568,000 or 0.16 percent of average loans receivable in the comparable quarter last year.
Classified assets at December 31, 2008 were $72.8 million, comprised of $14.4 million in the special mention category, $47.3 million in the substandard category and $11.1 million in real estate owned. Classified assets at June 30, 2008 were $68.6 million, consisting of $29.4 million in the special mention category, $29.8 million in the substandard category and $9.4 million in real estate owned. Classified assets increased at December 31, 2008 from the June 30, 2008 level primarily as a result of additional loan downgrades.
For the quarter ended December 31, 2008, twenty loans for $7.4 million were modified from their original terms, were re-underwritten and were identified in our asset quality reports as Restructured Loans. As of December 31, 2008, the outstanding balance of modified loans was $19.6 million: 22 are classified as pass and remain on accrual status ($7.6 million); one is classified as substandard and remains on accrual status ($240,000); and 34 are classified as substandard on non-accrual status ($11.8 million).
The allowance for loan losses was $35.0 million at December 31, 2008, or 2.69 percent of gross loans held for investment, compared to $19.9 million, or 1.43 percent of gross loans held for investment at June 30, 2008. The allowance for loan losses at December 31, 2008 includes $17.9 million of specific loan loss reserves, compared to $6.5 million of specific loan loss reserves at June 30, 2008. Management believes that the allowance for loan losses is sufficient to absorb potential losses inherent in loans held for investment.
The increase in non-interest income in the second quarter of fiscal 2009 compared to the same period of fiscal 2008 was primarily the result of increases in the gain on sale of loans and a lower loss on sale and operations of real estate owned acquired in the settlement of loans, partly offset by a decrease in loan servicing and other fees. The decrease in loan servicing and other fees was primarily attributable to fewer loan prepayments and the lower fees generated from fewer prepayments.
The gain on sale of loans increased to $1.4 million for the quarter ended December 31, 2008 from $934,000 in the comparable quarter last year. The average loan sale margin for mortgage banking was 80 basis points for the quarter ended December 31, 2008, compared to 109 basis points in the comparable quarter last year. Total loans sold for the quarter ended December 31, 2008 were $161.1 million, up 57 percent from $102.4 million for the same quarter last year. The gain on sale of loans for the second quarter of fiscal 2009 was negatively impacted by a $1.55 million recourse provision on loans sold that are subject to repurchase, compared to a $38,000 recourse recovery in the comparable quarter last year. The mortgage banking environment remains highly volatile as a result of the well-publicized deterioration of the single-family real estate market.
The volume of loans originated for sale increased $70.3 million, or 71 percent, to $168.7 million in the second quarter of fiscal 2009 from $98.4 million during the same period last year, the result of better liquidity in the secondary mortgage markets particularly in FHA/VA loan products and an increase in activity resulting from lower mortgage interest rates. Total loan originations (including loans originated for investment, loans purchased for investment and loans originated for sale) were $172.5 million in the second quarter of fiscal 2009, a decrease of $20.2 million, or 10 percent, from $192.7 million in the same quarter of fiscal 2008.
Twenty-two real estate owned properties were sold for a net gain of $572,000 in the quarter ended December 31, 2008 compared to six real estate owned properties sold for a net loss of $(229,000) in the same quarter last year. As of December 31, 2008, the real estate owned balance was $11.1 million (61 properties), compared to $9.4 million (45 properties) at June 30, 2008.
The decrease in non-interest expense was primarily the result of a decrease in premises and occupancy and professional expenses, partly offset by increases in deposit insurance premiums and regulatory assessments. The decrease in premises and occupancy expenses was the result of the cost savings generated from closing five mortgage banking loan production offices in the second quarter of fiscal 2008, while the decrease in professional expenses was the result of lower legal costs. Legal expenses were lower primarily as a result of lower costs related to the 23 fraudulent, individual construction loans located in Coachella, California. The higher deposit insurance and regulatory assessments were primarily attributable to an increase in the FDIC insurance premium.
The Company's efficiency ratio improved to 58 percent in the second quarter of fiscal 2009 from 64 percent in the second quarter of fiscal 2008. The improvement was the net result of an increase in net interest income, an increase in non-interest income and a decrease in non-interest expense.
The effective income tax rate for the second quarter of fiscal 2009 was 41.9 percent, compared to the effective income tax rate of 49.2 percent in the same quarter last year. The lower income tax rate was primarily the result of a lower percentage of permanent tax differences relative to income before taxes. The Company believes that the effective income tax rate applied in the second quarter of fiscal 2009 reflects its current income tax benefit.
The Bank currently operates 14 retail/business banking offices in Riverside County and San Bernardino County (Inland Empire), including the newly opened Iris Plaza office in Moreno Valley, California. Provident Bank Mortgage operates wholesale loan production offices in Pleasanton and Rancho Cucamonga, California and retail loan production offices in Glendora and Riverside, California.
The Company will host a conference call for institutional investors and bank analysts on Thursday, January 29, 2009 at 10:00 a.m. (Pacific Time) to discuss its financial results. The conference call can be accessed by dialing (800) 230-1096 and requesting the Provident Financial Holdings Earnings Release Conference Call. An audio replay of the conference call will be available through Thursday, February 5, 2009 by dialing (800) 475-6701 and referencing access code number 981070.
For more financial information about the Company please visit the website at www.myprovident.com and click on the "Investor Relations" section.
Safe-Harbor Statement
This press release and the conference call noted above contain statements that the Company believes are "forward-looking statements." These statements relate to the Company's financial condition, results of operations, plans, objectives, future performance or business. You should not place undue reliance on these statements, as they are subject to risks and uncertainties. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors which could cause actual results to differ materially include, but are not limited to, the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas; results of examinations of us by the Office of Thrift Supervision and our bank subsidiary by the Federal Deposit Insurance Corporation, the Office of Thrift Supervision or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses or to write-down assets; our ability to control operating costs and expenses; our ability to implement our branch expansion strategy; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we have acquired or may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; our ability to manage loan delinquency rates; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; legislative or regulatory changes that adversely affect our business; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board; war or terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and other risks detailed in the Company's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2008.
PROVIDENT FINANCIAL HOLDINGS, INC.
Consolidated Statements of Financial Condition
(Unaudited - Dollars In Thousands)
December 31, June 30,
2008 2008
--------------------------------------------------------------------
Assets
Cash and due from banks $ 17,514 $ 12,614
Federal funds sold -- 2,500
--------------------------------------------------------------------
Cash and cash equivalents 17,514 15,114
Investment securities - available for
sale at fair value 144,931 153,102
Loans held for investment, net of
allowance for loan losses of $34,953
and $19,898, respectively 1,265,404 1,368,137
Loans held for sale, at lower of cost
or market 46,447 28,461
Accrued interest receivable 6,712 7,273
Real estate owned, net 11,115 9,355
FHLB - San Francisco stock 32,929 32,125
Premises and equipment, net 6,687 6,513
Prepaid expenses and other assets 19,409 12,367
--------------------------------------------------------------------
Total assets $1,551,148 $1,632,447
--------------------------------------------------------------------
Liabilities and Stockholders' Equity
Liabilities:
Non interest-bearing deposits $ 40,297 $ 48,056
Interest-bearing deposits 894,527 964,354
--------------------------------------------------------------------
Total deposits 934,824 1,012,410
Borrowings 480,714 479,335
Accounts payable, accrued interest and
other liabilities 17,756 16,722
--------------------------------------------------------------------
Total liabilities 1,433,294 1,508,467
Stockholders' equity:
Preferred stock, $.01 par value (2,000,000
shares authorized; none issued and
outstanding) -- --
Common stock, $.01 par value (15,000,000
shares authorized; 12,435,865 and
12,435,865 shares issued, respectively;
6,208,519 and 6,207,719 shares
outstanding, respectively) 124 124
Additional paid-in capital 74,943 75,164
Retained earnings 136,251 143,053
Treasury stock at cost (6,227,346 and
6,228,146 shares, respectively) (93,930) (94,798)
Unearned stock compensation -- (102)
Accumulated other comprehensive income,
net of tax 466 539
--------------------------------------------------------------------
Total stockholders' equity 117,854 123,980
--------------------------------------------------------------------
Total liabilities and stockholders'
equity $1,551,148 $1,632,447
--------------------------------------------------------------------
PROVIDENT FINANCIAL HOLDINGS, INC.
Consolidated Statements of Financial Condition - Sequential Quarter
(Unaudited - Dollars In Thousands)
December 31, September 30,
2008 2008
--------------------------------------------------------------------
Assets
Cash and due from banks $ 17,514 $ 12,108
Investment securities - available for
sale at fair value 144,931 152,801
Loans held for investment, net of
allowance for loan losses of $34,953
and $22,519, respectively 1,265,404 1,321,970
Loans held for sale, at lower of cost
or market 46,447 39,110
Accrued interest receivable 6,712 7,002
Real estate owned, net 11,115 8,927
FHLB - San Francisco stock 32,929 32,616
Premises and equipment, net 6,687 6,659
Prepaid expenses and other assets 19,409 12,707
--------------------------------------------------------------------
Total assets $1,551,148 $1,593,900
--------------------------------------------------------------------
Liabilities and Stockholders' Equity
Liabilities:
Non interest-bearing deposits $ 40,297 $ 43,209
Interest-bearing deposits 894,527 912,588
--------------------------------------------------------------------
Total deposits 934,824 955,797
Borrowings 480,714 494,124
Accounts payable, accrued interest and
other liabilities 17,756 19,478
--------------------------------------------------------------------
Total liabilities 1,433,294 1,469,399
Stockholders' equity:
Preferred stock, $.01 par value (2,000,000
shares authorized; none issued and
outstanding) -- --
Common stock, $.01 par value (15,000,000
shares authorized; 12,435,865 and
12,435,865 shares issued, respectively;
6,208,519 and 6,208,519 shares
outstanding, respectively) 124 124
Additional paid-in capital 74,943 74,635
Retained earnings 136,251 143,072
Treasury stock at cost (6,227,346 and
6,227,346 shares, respectively) (93,930) (93,930)
Unearned stock compensation -- (22)
Accumulated other comprehensive income,
net of tax 466 622
--------------------------------------------------------------------
Total stockholders' equity 117,854 124,501
--------------------------------------------------------------------
Total liabilities and stockholders'
equity $1,551,148 $1,593,900
--------------------------------------------------------------------
PROVIDENT FINANCIAL HOLDINGS, INC.
Consolidated Statements of Operations
(Unaudited - In Thousands, Except Earnings (Loss) Per Share)
Quarter Ended Six Months Ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
--------------------------------------------------------------------
Interest income:
Loans receivable, net $ 19,648 $ 21,700 $ 40,306 $ 43,214
Investment securities 1,804 1,902 3,709 3,646
FHLB - San Francisco stock (125) 432 324 901
Interest-earning deposits 9 5 10 14
--------------------------------------------------------------------
Total interest income 21,336 24,039 44,349 47,775
Interest expense:
Checking and money market
deposits 302 499 632 924
Savings deposits 535 804 1,104 1,591
Time deposits 5,441 7,888 11,568 15,946
Borrowings 4,817 5,280 9,511 10,373
--------------------------------------------------------------------
Total interest expense 11,095 14,471 22,815 28,834
--------------------------------------------------------------------
Net interest income, before
provision for loan losses 10,241 9,568 21,534 18,941
Provision for loan losses 16,536 2,140 22,268 3,659
--------------------------------------------------------------------
Net interest (expense)
income, after provision for
loan losses (6,295) 7,428 (734) 15,282
Non-interest income:
Loan servicing and other
fees 266 513 514 1,004
Gain on sale of loans, net 1,394 934 2,585 1,056
Deposit account fees 777 785 1,535 1,443
Gain on sale of investment
securities -- -- 356 --
Loss on sale and operations
of real estate owned
acquired in the settlement
of loans (496) (704) (886) (1,008)
Other 383 419 696 827
--------------------------------------------------------------------
Total non-interest income 2,324 1,947 4,800 3,322
Non-interest expense:
Salaries and employee
benefits 4,525 4,522 9,150 9,646
Premises and occupancy 718 831 1,434 1,538
Equipment 397 391 757 791
Professional expenses 332 474 692 793
Sales and marketing
expenses 119 130 300 303
Deposit insurance and
regulatory assessments 288 115 610 230
Other 860 857 1,660 1,787
--------------------------------------------------------------------
Total non-interest expense 7,239 7,320 14,603 15,088
--------------------------------------------------------------------
(Loss) income before taxes (11,210) 2,055 (10,537) 3,516
(Benefit) provision for
income taxes (4,699) 1,011 (4,355) 1,860
--------------------------------------------------------------------
Net (loss) income $ (6,511) $ 1,044 $ (6,182) $ 1,656
--------------------------------------------------------------------
Basic (loss) earnings per
share $ (1.05) $ 0.17 $ (1.00) $ 0.27
Diluted (loss) earnings per
share $ (1.05) $ 0.17 $ (1.00) $ 0.27
Cash dividends per share $ 0.05 $ 0.18 $ 0.10 $ 0.36
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PROVIDENT FINANCIAL HOLDINGS, INC.
Consolidated Statements of Operations - Sequential Quarter
(Unaudited - In Thousands, Except Earnings (Loss) Per Share)
Quarter Ended
-------------------------
December 31, September 30,
2008 2008
--------------------------------------------------------------------
Interest income:
Loans receivable, net $ 19,648 $ 20,658
Investment securities 1,804 1,905
FHLB - San Francisco stock (125) 449
Interest-earning deposits 9 1
--------------------------------------------------------------------
Total interest income 21,336 23,013
Interest expense:
Checking and money market deposits 302 330
Savings deposits 535 569
Time deposits 5,441 6,127
Borrowings 4,817 4,694
--------------------------------------------------------------------
Total interest expense 11,095 11,720
--------------------------------------------------------------------
Net interest income, before provision for
loan losses 10,241 11,293
Provision for loan losses 16,536 5,732
--------------------------------------------------------------------
Net interest (expense) income, after
provision for loan losses (6,295) 5,561
Non-interest income:
Loan servicing and other fees 266 248
Gain on sale of loans, net 1,394 1,191
Deposit account fees 777 758
Gain on sale of investment securities -- 356
Loss on sale and operations of real
estate owned acquired in the settlement
of loans, net (496) (390)
Other 383 313
--------------------------------------------------------------------
Total non-interest income 2,324 2,476
Non-interest expense:
Salaries and employee benefits 4,525 4,625
Premises and occupancy 718 716
Equipment 397 360
Professional expenses 332 360
Sales and marketing expenses 119 181
Deposit insurance premiums and regulatory
assessments 288 322
Other 860 800
--------------------------------------------------------------------
Total non-interest expense 7,239 7,364
--------------------------------------------------------------------
(Loss) income before taxes (11,210) 673
(Benefit) provision for income taxes (4,699) 344
--------------------------------------------------------------------
Net (loss) income $ (6,511) $ 329
--------------------------------------------------------------------
Basic (loss) earnings per share $ (1.05) $ 0.05
Diluted (loss) earnings per share $ (1.05) $ 0.05
Cash dividends per share $ 0.05 $ 0.05
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PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands, Except Share Information)
Quarter Ended Six Months Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
SELECTED FINANCIAL
RATIOS:
(Loss) return on
average assets (1.67)% 0.26% (0.78)% 0.21%
(Loss) return on
average stockholders'
equity (21.44)% 3.30% (10.07)% 2.60%
Stockholders' equity
to total assets 7.60% 7.69% 7.60% 7.69%
Net interest spread 2.50% 2.17% 2.59% 2.17%
Net interest margin 2.70% 2.42% 2.79% 2.41%
Efficiency ratio 57.61% 63.57% 55.45% 67.77%
Average interest-
earning assets to
average interest-
bearing liabilities 107.32% 107.46% 107.38% 107.49%
SELECTED FINANCIAL
DATA:
Basic (loss) earnings
per share $ (1.05) $ 0.17 $ (1.00) $ 0.27
Diluted (loss)
earnings per share $ (1.05) $ 0.17 $ (1.00) $ 0.27
Book value per share $ 18.98 $ 20.35 $ 18.98 $ 20.35
Shares used for basic
EPS computation 6,203,618 6,134,368 6,194,625 6,186,857
Shares used for
diluted EPS
computation 6,203,618 6,197,679 6,194,625 6,245,272
Total shares issued
and outstanding 6,208,519 6,196,434 6,208,519 6,196,434
LOANS ORIGINATED FOR
SALE:
Retail originations $ 48,269 $ 30,075 $ 99,827 $ 64,634
Wholesale
originations 120,389 68,324 234,833 133,278
---------- ---------- ---------- ----------
Total loans
originated for
sale $ 168,658 $ 98,399 $ 334,660 $ 197,912
LOANS SOLD:
Servicing released $ 161,104 $ 102,009 $ 316,162 $ 196,648
Servicing retained -- 395 193 2,534
---------- ---------- ---------- ----------
Total loans sold $ 161,104 $ 102,404 $ 316,355 $ 199,182
As of As of As of As of
12/31/08 09/30/08 06/30/08 03/31/08
---------- ---------- ---------- ----------
ASSET QUALITY RATIOS
AND DELINQUENT LOANS:
Non-performing loans
to loans held for
investment, net 3.62% 2.70% 1.70% 1.39%
Non-performing assets
to total assets 3.67% 2.80% 1.99% 1.63%
Allowance for loan
losses to
non-performing loans 76.24% 62.99% 85.79% 85.53%
Allowance for loan
losses to gross
loans held for
investment 2.69% 1.67% 1.43% 1.18%
Net charge-offs to
average loans
receivable 1.24% 0.90% 0.89% 1.02%
Non-performing loans $ 45,848 $ 35,749 $ 23,193 $ 19,575
Loans 30 to 89 days
delinquent $ 9,021 $ 6,182 $ 7,367 $ 8,979
REGULATORY CAPITAL
RATIOS:
Tangible equity ratio 7.25% 7.42% 7.19% 7.09%
Core capital ratio 7.25% 7.42% 7.19% 7.09%
Total risk-based
capital ratio 12.88% 12.96% 12.25% 11.98%
Tier 1 risk-based
capital ratio 11.63% 11.71% 10.99% 10.80%
PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited)
(Dollars in Thousands) As of December 31,
-------------------------------------------
2008 2007
------------------- -------------------
INVESTMENT SECURITIES: Balance Rate Balance Rate
------------------- -------------------
Held to maturity:
U.S. government
sponsored enterprise
debt securities $ -- --% $ 5,000 3.17%
---------- ----------
Total investment
securities held to
maturity -- -- 5,000 3.17
Available for sale (at
fair value):
U.S. government sponsored
enterprise debt
securities 5,377 4.00 7,810 3.19
U.S. government agency
MBS 89,358 4.95 82,716 5.31
U.S. government sponsored
enterprise MBS 48,440 5.13 53,401 5.45
Private issue
collateralized mortgage
obligations 1,756 4.74 3,893 4.27
Freddie Mac common stock -- 204
Fannie Mae common stock -- 16
Other common stock -- 502
---------- ----------
Total investment
securities available
for sale 144,931 4.97 148,542 5.20
---------- ----------
Total investment
securities $ 144,931 4.97% $ 153,542 5.13%
LOANS HELD FOR
INVESTMENT:
Single-family (1 to 4
units) $ 761,426 5.92% $ 825,667 5.98%
Multi-family (5 or more
units) 381,704 6.35 388,041 6.63
Commercial real estate 127,574 6.89 147,648 7.06
Construction 14,255 8.34 52,239 8.81
Commercial business 8,185 6.88 9,250 7.84
Consumer 978 8.85 547 11.87
Other 4,588 7.88 3,954 9.20
---------- ----------
Total loans held
for investment 1,298,710 6.18% 1,427,346 6.39%
Undisbursed loan funds (3,242) (20,366)
Deferred loan costs 4,889 5,595
Allowance for loan losses (34,953) (17,171)
---------- ----------
Total loans held for
investment, net $1,265,404 $1,395,404
Purchased loans serviced
by others included
above $ 132,689 6.20% $ 159,592 6.82%
DEPOSITS:
Checking accounts - non
interest-bearing $ 40,297 --% $ 42,582 --%
Checking accounts -
interest-bearing 115,397 0.65 120,247 0.61
Savings accounts 137,017 1.42 146,772 2.17
Money market accounts 24,230 1.52 30,432 2.45
Time deposits 617,883 3.30 665,651 4.57
---------- ----------
Total deposits $ 934,824 2.51% $1,005,684 3.49%
Note: The interest rate or yield/cost described in the rate or
yield/cost column is the weighted-average interest rate or
yield/cost of all instruments, which are included in the
balance of the respective line item.
PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars in Thousands)
As of December 31,
----------------------------------------------
2008 2007
---------------------- ----------------------
Balance Rate Balance Rate
---------------------- ----------------------
BORROWINGS:
Overnight $ 12,000 0.05% $ 27,630 4.18%
Six months or less 42,000 3.27 190,000 4.20
Over six to twelve
months 75,000 3.87 15,000 3.57
Over one to two years 95,000 4.43 85,000 3.87
Over two to three
years 115,000 4.11 65,000 4.99
Over three to four
years 45,000 4.44 65,000 4.82
Over four to five
years 80,000 3.71 45,000 4.44
Over five years 16,714 3.26 1,754 6.37
---------- ----------
Total borrowings $ 480,714 3.89% $ 494,384 4.34%
Quarter Ended Six Months Ended
December 31, December 31,
---------------------- ----------------------
SELECTED AVERAGE 2008 2007 2008 2007
BALANCE SHEETS: Balance Balance Balance Balance
---------- ---------- ---------- ----------
Loans receivable,
net (1) $1,325,675 $1,398,321 $1,350,464 $1,386,524
Investment securities 149,314 153,816 152,036 151,618
FHLB - San Francisco
stock 32,769 30,986 32,573 32,951
Interest-earning
deposits 9,595 532 7,898 639
---------- ---------- ---------- ----------
Total interest-earning
assets $1,517,353 $1,583,655 $1,542,971 $1,571,732
Deposits $ 937,535 $1,008,318 $ 959,249 $1,007,132
Borrowings 476,376 465,452 477,642 455,075
---------- ---------- ---------- ----------
Total interest-bearing
liabilities $1,413,911 $1,473,770 $1,436,891 $1,462,207
Quarter Ended Six Months Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
Yield/Cost Yield/Cost Yield/Cost Yield/Cost
---------- ---------- ---------- ----------
Loans receivable,
net (1) 5.93% 6.21% 5.97% 6.23%
Investment securities 4.83% 4.95% 4.88% 4.81%
FHLB - San Francisco
stock (1.53)% 5.58% 1.99% 5.47%
Interest-earning
deposits 0.38% 3.76% 0.25% 4.38%
Total interest-earning
assets 5.62% 6.07% 5.75% 6.08%
Deposits 2.66% 3.62% 2.76% 3.64%
Borrowings 4.02% 4.50% 3.96% 4.52%
Total interest-bearing
liabilities 3.12% 3.90% 3.16% 3.91%
(1) Includes loans held for investment, loans held for sale and
receivable from sale of loans.
Note: The interest rate or yield/cost described in the rate or
yield/cost column is the weighted-average interest rate or
yield/cost of all instruments, which are included in the
balance of the respective line item.